Cloud CIO: Yes, Your Job Is At Risk

CIOs and senior IT managers are not immune from the employment risks that cloud computing poses to lower-level infrastructure and operations workers. Failing to rethink the delivery of IT services--and the new organizational structures that will be needed to deliver them--poses a threat to their job security.

Left unsaid—typically, anyway—in most discussions about cloud computing is the implicit threat that it will be the cause of job losses. The clamorous suspicion that many IT groups display toward public cloud services seems to have a large emotional component to it, and highly-charged negative emotions typically reflect visceral fear. It's difficult to conclude that some (if not much) of the resistance from internal IT groups to the use of public cloud resources boils down to simple worry about unemployment.

To quote novelist and firebrand Upton Sinclair: "It is difficult to get a man to understand something when his job depends on not understanding it." Certainly, we've seen many internal IT groups refuse to acknowledge any potential benefits or use cases for public cloud computing, while citing all the potential drawbacks at length.

Take a survey like this one, in which only seven percent of all IT respondents said they would embrace public cloud computing, while 47 percent said they'd prefer a private cloud. (The rest, presumably, are busy finding a rock to hide under.) It's awfully tempting to interpret the results as reflecting a self-protective desire to avoid outsourcing because that's how many IT personnel see public cloud providers—as an outsourcer that will impact IT employment. After all, that was the result of the last outsourcing boom.

In the last go-round, outsourcers offered to take over data center operations for companies and reduce their costs. Sometimes employees transferred to the outsourcing company, but many times employees were given a pink slip when the new firm took over.

With that experience in mind, it's natural that IT personnel would resist using public cloud computing. Asking an infrastructure and operations (I&O) person what he or she thinks of public cloud computing is like asking a turkey what it thinks of Thanksgiving.

Here's the thing, though. If you're an I&O operations person, cloud computing is a threat to your job, whether it's public or private. Cloud computing represents virtualization supercharged by automation, and automation always threatens jobs—especially those of lower-skilled employees. Simply put, cloud computing will displace the jobs of those who perform routine operations tasks.

This fact was described in a recent InfoWorld article by Paul Krill. The most telling quote came from Forrester analyst Ted Schadler, who said "cloud computing poses a direct threat to 'blue collar' IT, such as admins and others who simply maintain IT infrastructure."

I've long sought a phrase to capture the challenge many IT personnel will face with the rise of cloud computing, and Ted's quote captures it perfectly. If you are an admin or operations employee whose knowledge is basic installation, configuration and administration of software components, cloud computing is likely to make you redundant. It's the automation element of cloud computing, not virtualization, that is the cause of this redundancy.

In fact, one might say that one of the reasons vanilla virtualization caught on so quickly was because it improved capital utilization while not disrupting labor much at all. People could use the same skills they always used, just on virtual rather than physical machines. And even though virtualization—even before cloud computing—could reduce labor, many organizations did not embrace those capabilities. For example, a year ago I talked with an operations person from a very well-known technology vendor's IT department. He told me the MBO for the year was to begin using virtual machine templates. Currently, they were just getting a virtual machine and installing and configuring all software by hand, just like they used to do with physical servers.

The phenomenon of automation displacing low-skilled labor is nothing new. In manufacturing it has been occurring for decades. See this chart that maps U.S. manufacturing output against manufacturing employment. Even though the U.S. manufactures far more today than in the past, far fewer people are employed in the sector. I remember a striking anecdote from a New Yorker article dating back a number of years which described a factory that operated at full blast with one (!) person in it, monitoring the manufacturing systems.

Perhaps the right metaphor for the coming disruption of I&O is Henry Ford's invention of mass production. By automating the assembly line, he vastly increased productivity and vastly decreased the number of employees required to build a given number of cars. The net effect of his creation, however, was to transform the automobile manufacturing industry. After Ford, you had to be an assembly line manufacturer with competitive costs to stay in business as a significant industry player. The result of Ford's innovation was that hundreds of car manufacturers went out of business.

With regard to cloud computing, though, the image of a single person monitoring an automated factory is more appropriate. Because computing is digital, we can automate it rather than rely on humans to assemble the various parts.

The necessary skill in these automated, highly productive cloud environments is not basic installation and configuration; it's designing and implementing the systems that automate the environment—in other words, designing and implementing the information factory. The data center of the near future will have a standardized environment provided by a vendor (e.g., VMware or one of the open source distributors). The organization will need the skills to operate this highly automated, standardized environment, which are much more complex than those needed to install and configure a single server. Being an I&O employee in the future is going to require a step-change in skills, and those who cannot make the transition will face significant career turbulence.

How Cloud Computing Will Impact the CIO Role

So what does this mean to the CIO or other senior IT management? After all, this issue is all about lower-level employees, right? Yes & and no.

My firm's belief is that just as Henry Ford transformed the economics of the assembly factory, cloud computing is about to transform the economics of the information factory. IT organizations are about to face a challenge to their economics unlike any they have previously encountered. Simply put, IT organizations will come under pressure to meet the cost structures of the best-of-breed public providers.

This isn't about squeezing a couple of percent out of the budget by reducing travel and postponing training. This is an entirely different category of cost reduction: It requires a fundamental rethinking of the costs throughout the data center, and that includes the legacy portion as well as any private cloud environment that is stood up.

Failing to rethink the delivery of services—and the organization necessary to deliver them—poses a threat to the job tenure of even the most senior IT executives. We've seen this previously in other areas of corporations, such as in HR. A new breed of outsourced HR service firms sprang up and proposed that companies could save money by shifting many of their HR functions to external providers. Many HR executives insisted that only their staff could provide necessary services to employees because of organizational familiarity, on-site access, better alignment with user organizations, etc. But in the end, the economics won out. Those HR executives who continued to run things the old way were eventually replaced by new ones who recognized that their job was providing cost-competitive services.

Similarly, successful IT executives in the future will be those who recognize that their job is infrastructure management at market rates, not asset ownership. If one accepts the information factory concept, then the question for CIOs is how to operate the factory (their IT departments) as efficiently as possible. To learn more, read this interview with the CIO of News International, who has embraced this approach.

I sometimes think that the whole private vs. public cloud debate will pale in comparison to the legacy vs. SaaS carnage that is going to happen. By far the largest part of IT budgets is tied up in legacy systems that most IT organizations treat as unchangeable—too much work to do anything about other than to manage as simply as possible and with as little maintenance as possible.

But how can we justify sticking with an existing system when SaaS alternatives are so much cheaper? Just to cite one example, I recently met with a CIO who shifted off of an existing on-premise PeopleSoft system to the on-demand Workday application and paid for the entire migration out of the first year of savings—with the savings from every year thereafter being gravy. Being a CIO without an aggressive plan to shift off of legacy systems (and I repeat, these represent by far the biggest proportion of IT budgets) when SaaS alternatives offer so much savings makes you extremely vulnerable.

We can say that the IT industry is in for more change in the next 10 years than it has seen in the last thirty. The IT organization of 2021 will be unrecognizable to those steeped in long-established practices. In 10 year's time, we will look back on today's I&O practices the way we observe someone making a long-distance call in an old black-and-white movie: "Hello operator, get me New York." They had to do things that way? Just be sure you don't end up the IT equivalent of the switchboard supervisor.

Bernard Golden is CEO of consulting firm HyperStratus, which specializes in virtualization, cloud computing and related issues. He is also the author of "Virtualization for Dummies," the best-selling book on virtualization to date.

Follow Bernard Golden on Twitter @bernardgolden. Follow everything from CIO.com on Twitter @CIOonline.

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